Dollar falls as data show economic slowing

The dollar fell (NYBOT:DXU13) against the majority of its 16 most-traded peers after an unexpected slump in a regional manufacturing index bolstered the argument for the Federal Reserve to put off winding down its bond-buying program.

The yen reversed losses (FOREX:USDJPY) versus the dollar after U.S. housing-price gains trailed forecasts. Data since a July 5 report said U.S. payrolls rose more than forecast have shown housing starts and existing-home sales unexpectedly fell. Fed Chairman Ben S. Bernanke told Congress last week it was “too early” to decide to begin tapering asset purchases. Canada’s dollar climbed after the nation’s retail sales jumped.

“The growth data, aside from employment, have been showing signs of weakness,” Brian Daingerfield, a currency strategist at Royal Bank of Scotland Group Plc’s RBS Securities unit in Stamford, Connecticut, said in a phone interview. “There is some focus on the weaker data, and with Bernanke out of the way, squaring up of positions is the name of the game in the near term.”

The dollar declined 0.3% to $1.3226 per euro at 3:16 p.m. New York time. It touched $1.3239, the weakest level since June 21, after gaining 0.2% earlier. The U.S. currency depreciated 0.2% to 99.46 yen after rising 0.5% earlier to 100.18. It. The yen weakened 0.1% to 131.54 per euro.

The European currency extended gains versus the dollar before data tomorrow forecast to show increases this month in manufacturing and services in the 17-nation region.

Forint Drops

Hungary’s forint fell versus most major counterparts after the central bank cut its main interest rate for a 12th consecutive month and President Gyorgy Matolcsy said he expects to extend monetary easing. The currency depreciated 0.6% to 295.89 per euro after strengthening 0.5% yesterday.

Canada’s dollar (FOREX:CADUSD) climbed versus its U.S. counterpart after a government report showed Canadian retail sales increased in May at the fastest pace in three years. The currency strengthened 0.5% to C$1.0286 to the greenback.

South Africa’s rand strengthened for a third day, advancing 1.2% to 9.7061 versus the dollar.

JPMorgan Chase & Co.’s G-7 Volatility Index, a measure of currency fluctuations, declined to 9.21% and touched 9.18%, the lowest intraday level since May 9. The gauge has dropped for nine consecutive days, the longest stretch of declines since July 2012. It touched 11.96%, the highest this year, on June 24.